Tribune Publishing dismisses digital marketing team as it looks to boost revenues.

When industry veteran Dan Hickey joined Tribune Publishing in January to head up digital marketing services, he saw great promise in the nascent division's work, which last year included creating an online video series for Jewel-Osco and a multimedia website for Hangar 1 vodka.

That didn't stop him from purging the entire sales staff, reassigning some and cutting loose dozens of others in a sweeping reorganization. Such is the urgency of his mission: Turn the legacy newspaper company's online marketing expertise into a major profit center.

"We were doing work for Jewel, we were doing work for several other clients that were really pretty impressive programs, but there weren't enough of them," Hickey said.

The newspaper industry, which has seen its advertising revenue cut in half since 2005, is embracing digital marketing services as a crucial alternative revenue stream. Web development, paid search and social media strategies are the core offerings, with the related category of content marketing helping clients create everything from videos to stories in a bid to engage customers.

While still a small part of total revenue, the Newspaper Association of America reported that digital marketing services grew 43 percent across the newspaper industry in 2013, the last full year for which data is available.

Chicago-based Tribune Publishing, which includes the Chicago Tribune, Los Angeles Times and eight other daily newspapers, is playing "catch-up" in the digital arena after spinning off from Tribune Media in August, according to Tribune Publishing CEO Jack Griffin.

Building digital marketing services has been a priority for Griffin since taking the reins last April. The former CEO of Time Inc. launched a leading marketing services company now known as Meredith Xcelerated Marketing during his previous 12-year tenure at Iowa-based magazine publisher Meredith Corp.

Operating under the banner 435 Digital, Tribune Publishing's digital marketing services built 99 websites and generated $24.8 million last year. The 55 percent year-over-year increase was not nearly enough for Griffin, who tabbed fellow Meredith alumnus Hickey to speed the process.

"I'm here to accelerate this business, and make it so that it's enduring and it's profitable, and that it is serving our best customers and best advertisers," Hickey said.

Hickey, 55, was a top executive at Meredith for more than a decade, where he managed digital brands such as Better Homes and Gardens. He also headed up digital content creation for clients such as Wal-Mart and Home Depot.

Most recently he was general manager for Telegraph Media Group in London, which he left in November after a year. He consulted for Tribune Publishing in December and was hired to run Digital Marketing Services the following month.

While his hiring wasn't announced publicly, his presence has certainly been felt. Hickey has executed a complete overhaul of the sales staff, recruiting a smaller team of "specialized" salespeople to act as digital consultants and refocusing efforts on Tribune Publishing's largest 200 clients.

Hickey also has folded the newspaper's content marketing team under 435 Digital, a simple yet innovative move.

"I think the strategy of bringing them both together into a singular business with a singular sales force makes a lot of sense," said media consultant Ken Doctor. "It's the right synergy and I think that it would be, largely, a new model for the daily newspaper industry."

Content marketing provides information to engage viewers through an embedded or implied sponsorship, as opposed to an overt commercial message. It can take the form of videos, stories or a dedicated website.

The full digital suite, including content creation, can generate hundreds of thousands of dollars annually per client, Hickey said. Last year, there were 44 brand publishing clients, of which half were the kind of mid- or large-size companies 435 Digital is targeting.

Hickey said 435 Digital will remain headquartered in Chicago, but with salespeople on the ground in each market, working with the legacy publishing sales force.

The content creation team includes 15 writers, editors and producers split between Chicago and Los Angeles, with a network of freelancers on call.

Content marketing is more often associated with large national brands, but is beginning to trickle down to regional marketers, Doctor said, making it a timely centerpiece for 435 Digital.

"We get content, we understand great storytelling. It's part of our DNA," Hickey said. "Marketers are telling us they understand the power of a great story, but they don't know how to do great storytelling."

When those videos and stories appear on a newspaper's website, they are considered "native advertising" — editoriallike content under the direction of advertisers meant to seamlessly draw viewers from actual news stories. Legacy publishers from The New York Times to Time have moved into native advertising as a means to boost digital advertising revenue.

In some cases, they also have boosted readership.

The New York Times ran a multimedia piece in June about women inmates that was actually a paid ad for the Netflix series "Orange is the New Black." The story, "Women Inmates: Why the Male Model Doesn't Work," was among the top 1,000 traffic articles on nytimes.com in 2014, according to study results published recently in The New York Times.

While publishers have vowed to keep the editorial and advertising efforts separate — paid content is marked as such, just like print advertorials of old — viewers often can't tell the difference online. A study conducted by the Interactive Advertising Bureau last year showed only 41 percent of people shown sponsored content knew it was paid for by a brand.

"We need to be a little more standardized in our labeling, but we're very clear about the labeling, what I call principle of clarity of authorship," Hickey said. "The reader has a right to understand where it came from and who wrote it."

435 Digital's campaign last year for Jewel-Osco, "Something Fresh," was a video series showing young "influential" Chicagoans shopping, preparing and serving foods from the grocery. The videos appeared on Jewel-Osco's YouTube page and on chicagotribune.com, where they remain posted with a small advertisement disclaimer reading, "This content isn't produced by the newsroom."

Hickey expects readers to see a lot more sponsored content on chicagotribune.com.

"Not many people can create great content on a regular basis, and we can," Hickey said. "We look at that as really the growth opportunity."